U.S. Court of Appeals sides with FTC in data breach case

The U.S. Court of Appeals for the Eleventh Circuit has dismissed LabMD’s challenge to the current Federal Trade Commission (FTC) enforcement action regarding an alleged healthcare privacy breach, reports The National Law Review.

The FTC had launched an investigation into LabMD, a cancer-detection testing service based in Atlanta, after its confidential patient files were found on the file-sharing site LimeWare. Following a three-year investigation, the agency filed an administrative complaint against LabMD in August 2013, alleging the company didn't do enough to protect patient data, according to AM Law Litigation Daily.

LabMD filed a motion to dismiss in a lower federal court in Georgia, arguing that the case should be dismissed because the FTC has no authority to regulate protected health information. When the federal court denied the request, LabMD appealed to the Eleventh Circuit Court of Appeals, and which also rejected LabMD’s motion.

The Eleventh Circuit ruled LabMD only can ask the federal courts to weigh in on the FTC’s authority after it exhausts administrative remedies, meaning that the company must first go through the FTC administrative hearing process until the agency makes a final decision, according to the National Law Review.